Persistent low supply continues to affect the US housing market

May 24, 2017

3 min read

The US housing market – Stubbornly low housing supply levels held down existing home sales in April in the United States and also pushed the median number of days a home was on the market to a new low, the latest index shows.

Total existing home sales fell by 2.3% month on month but are still 1.6% above a year ago and at the fourth highest pace over the last year, according to the report from the National Association of Realtors.

Every major region apart for the Midwest saw a retreat in existing sales in April and Lawrence Yun, NAR chief economist, said that demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to buy.

The data also shows that the median existing home price for all housing types is 6% higher than April 2016 and has now increased year on year for 62 months in a row.

Total housing inventory at the end of April climbed 7.2% to 1.93 million homes available for sale but is still 9% lower than a year ago and has fallen year on year for 23 consecutive months. Unsold inventory is at a 4.2 month supply at the current sales pace, which is down from 4.6 months a year ago, saying a lot about the US housing market.

Yun pointed out that real estate agents continue to voice the frustration their clients are experiencing because of the insufficient number of homes for sale. ‘Homes in the lower and middle market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher,’ he said.

Properties typically stayed on the market for 29 days in April, which is down from 34 days in March and 39 days a year ago, and surpasses last May’s 32 days as the shortest timeframe since NAR began tracking in May 2011. Some 52% of homes sold in April were on the market for less than a month, a new high.

The figures also show that all cash sales made up 21% of transactions in April, down from 23% in March and 24% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in April, unchanged from March but up from 135 a year ago while 57% of investors paid in cash in April.

Distressed sales made up 5% of transactions, down from 6% in March and 7% a year ago. Some 3% of April sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 18% below market value in April, up from 16% in March, while short sales were discounted 12%, down for 14% in March. Keep checking out our up to date news on the US housing market.